German shares underperform in Europe as Ukraine conflict hurts economy
* Germany's DAX down 1.1 pct, FTSEurofirst 300 down 0.2 pct * ZEW index, Henkel's guidance show Germany hit by Ukraine crisis * Danish jeweller Pandora rallies after results By Francesco Canepa LONDON, Aug 12 (Reuters) - German shares lagged European peers on Tuesday as weak sentiment data and a gloomy outlook from consumer goods group Henkel provided more evidence the region's largest economy is being hurt by the conflict in Ukraine. Frankfurt's DAX index fell 1.1 percent, the biggest decline among major regional bourses, after the ZEW survey showed German analyst and investor morale fell to its lowest in more than a year in August. The survey reflected the turmoil in Ukraine and concern that sanctions and counter-sanctions between Russia and the West may affect Europe's industrial powerhouse. German companies exposed to Russia range from Adidas, the world's second-largest sportswear firm, to airport operator Fraport and defence firm Rheinmetall. Henkel warned that earnings growth would slow in the second half of the year, partly because of the friction between Russia and Ukraine. Its shares fell 5 percent. A Russian convoy carrying food, water and other aid set off on Tuesday for eastern Ukraine, where government forces are closing in on pro-Russian rebels, but Kiev said it would not allow the vehicles to cross onto its territory. At 1455 GMT, the FTSEurofirst 300 index of top European shares was down 0.2 percent at 1,320.51 points, after hovering around the gain line for most of the day. "Now you have the Ukrainians not letting the aid convoy in and that shows (the situation) is very far from being solved," Markus Huber, a senior sales trader at Peregrine & Black, said. "It seems that the market hasn't made its mind up at the moment and I haven't seen a clear signal yet that we're turning around." The FTSEurofirst is down 6 percent from its July peak, hit by worries about conflicts from Ukraine to the Middle East, the prospect of tighter U.S. monetary policy and softer European economic data. "We've already seen the underperformance, so if there is no new (negative) development and the economy starts doing not so badly we may have seen the trough for this correction," said Joost Van Leenders, an investment specialist for allocation and strategy at BNP Paribas Investment Partners. Danish jewellery maker and retailer Pandora was a sharp outperformer, rising 8.3 percent after it posted better-than-expected second-quarter results, leading it to raise its 2014 revenue forecast. As Europe's earnings season draws to a close, STOXX Europe 600 companies have posted a 9.7 percent rise in second-quarter profits on average. But revenues have slipped 1.1 percent, reflecting Europe's frustratingly slow economic recovery. Europe bourses in 2014: link.reuters.com/pap87v Asset performance in 2014: link.reuters.com/gap87v Today's European research round-up (Additional reporting by Blaise Robinson in Paris; Editing by Mark Trevelyan)
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